Drawdown Lifetime Mortgage

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How does it work?

Similar advantages and disadvantages as a regular lifetime mortgage, with additional issues that are unique to this kind of equity release scheme. The main difference is that you don't request the full sum of money available to you immediately. Instead, you decide on a maximum amount of equity you want to release, and 'drawdown' the cash in stages as and when required.

ADVANTAGES

You are in control of your money as you can release cash when it suits you, or you may be able to request a monthly income with no monthly payments to make
You retain full ownership of your home
You only pay interest on the amount of equity released from your home, so interest could accumulate more slowly than with a regular lifetime mortgage
Drawdown Lifetime Mortgage plans may be available to younger people (aged 55+)
Some Drawdown Lifetime Mortgage plans let you guarantee an inheritance for your family

DISADVANTAGES

Interest rates are usually higher than on a standard lifetime mortgage
Reduced amount available to leave as an inheritance
Interest grows quickly as it is compounded
If you want to increase the amount of equity released beyond the original amount agreed, you would normally have to apply for a further advance, which is not guaranteed
If you repay the lifetime mortgage loan early, you may have to pay an early repayment charge
Your tax position and certain state benefits may be affected

Warning Text

A LIFETIME MORTGAGE WILL REDUCE THE VALUE OF YOUR ESTATE AND MAY AFFECT YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS AND TAX STATUS.

THE IMPACT OF NOT SERVICING MONTHLY INTEREST PAYMENTS ON A LIFETIME MORTGAGE IS THAT THE OUTSTANDING DEBT CAN GROW RAPIDLY, THUS REDUCING THE VALUE OF YOUR ESTATE.

FOR EXAMPLE, IF THE INTEREST RATE WAS 7% A YEAR, A £50,000 LOAN WOULD DOUBLE TO £100,000 AFTER 10 YEARS ASSUMING NO REPAYMENTS ARE MADE.

THIS IS AN EXAMPLE FOR ILLUSTRATIVE PURPOSES ONLY AND PERSONALISED ADVICE AND RECOMMENDATIONS SHOULD BE SOUGHT FROM A QUALIFIED PROFESSIONAL. YOU ARE STRONGLY ADVISED TO REGISTER A LASTING POWER OF ATTORNEY. THIS WILL ALLOW YOUR AFFAIRS TO BE MANAGED BY SOMEBODY ELSE IF YOUR MENTAL ABILITIES SIGNIFICANTLY DECLINE.

EQUITY RELEASE SERVICES ARE REFERRED TO A THIRD PARTY. NEITHER SYNCHRO MORTGAGE SOLUTIONS LTD NOR PRIMIS ARE RESPONSIBLE FOR THE SERVICE RECEIVED. THESE SERVICES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY AND MAY HAVE LIMITED CONSUMER PROTECTION.